A new tax year may have only just started but it is already worth getting ready for April 2027 as savers and investors will be hit with even more tax grabs.
Several new tax changes have been brought in since the start of the 2026/27 tax year including higher dividend rates, and while the focus may be on making use of reliefs and allowances over the next 12 months, a bigger shake-up is coming in April 2027.
From the start of the next tax year, pensions will be included as part of estate calculations for inheritance tax, the cash ISA allowance will be restricted to £12,000 per year for under 65s and tax rates on savings interest and property income will be hiked.
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April 2027 may seem a long way away but there are benefits to preparing now.
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Antonia Medlicott, founder of Investing Insiders, said: “The next wave of tax changes risks catching many people off guard, particularly around pensions and ISAs.
"Overall, the key is to review plans now rather than react later, checking balances across pensions, ISAs and taxable accounts, and making full use of allowances while they last.”
1. Pension inheritance tax changes
Currently, pensions fall outside a person’s estate when making inheritance tax calculations.
This makes it easier to pass on wealth but from April 2027, unused retirement savings will be counted in the value of an estate, which could tip the total above the £325,000 inheritance tax threshold.
Jason Hollands, managing director of Evelyn Partners, said: “Historically, pensions have been highly attractive from an estate planning perspective. Individuals with sufficient alternative resources have often chosen to preserve pension wealth for as long as possible, using it as a tax-efficient vehicle for passing assets to the next generation.
"From April 2027, this long-standing approach may need to be reconsidered.
“Anyone whose estate is likely to fall within the scope of IHT should review their position carefully and seek professional advice. Importantly, pensions should no longer be viewed in isolation, but as part of a broader, integrated estate planning strategy.”
Options include taking more from your pension while you can and making use of gifting allowances to ensure more money goes towards you and your loved ones rather than the taxman.
Hollands suggested the changes also underline the importance of diversification across different tax wrappers.
He said: “While pensions remain valuable, it may be increasingly important not to rely on them exclusively. ISAs continue to play a central role, and for some investors, offshore bonds may offer additional flexibility.
“These can be reassigned – to a spouse, adult children or into trust – without triggering an immediate tax charge, although tax may arise on eventual encashment. When combined with trust planning, they can help move future growth outside the estate, subject to the usual rules.”
Shaun Moore, tax and financial planning expert at Quilter, warned there are also practical consequences.
He said: “As pensions become part of the estate, probate is likely to become more complex and time‑consuming.
"Many households may want to respond by consolidating accounts, updating wills and putting lasting powers of attorney in place. These are not tax strategies, but they can make a meaningful difference for families later on, when simplicity and clarity matter most.”
2. Reduced cash ISA allowance
In an effort to encourage more people to invest, the cash ISA allowance will be restricted to £12,000 from April 2027 for people under the age of 65.
That means this is the last tax year where those affected can use the full £20,000 ISA allowance entirely on cash ISAs.
From next April, only up to £12,000 of the £20,000 can be put in a cash ISA but the full amount can still be put to work on the stock market via a stocks and shares ISA.
This will fundamentally change how many people use cash ISAs, Moore suggested.
He added: “With only £12,000 available, younger savers who want to make full use of the £20,000 allowance will be pushed towards stocks and shares ISAs. That raises the importance of understanding risk and time horizons, particularly for those who have relied on cash as a default rather than a choice.”
Medlicott added that using current allowances while they remain available has become more important.
She said: “Savers should also reassess whether cash ISAs are still suitable for longer-term money, or whether a mix with stocks and shares ISAs offers better flexibility."
3. Higher property and savings tax rates
Income tax rates for savings and property income are set to rise from 6 April 2027 by two percentage points.
This means the basic rate will increase from 20% to 22%, the higher rate will increase from 40% to 42% and the additional rate will increase from 45% to 47%.
That means savers need to monitor the amount of interest they are earning and consider using ISAs.
Hollands said the changes create another headache for landlords who will pay more tax on rental income after already being hit with the Renters’ Rights Act reforms and higher stamp duty costs.
Hollands said: “Planning options in this area are more limited but may still be worth exploring. One approach is to transfer ownership between spouses so that rental income is taxed at a lower marginal rate. Another is to consider holding property within a corporate structure, where profits are subject to corporation tax (currently up to 25%) rather than income tax.
“However, incorporation is not straightforward and can trigger both capital gains tax and stamp duty, so it is generally only suitable in specific circumstances – typically for those with larger portfolios and a long-term investment horizon.”
